Diageo buys stake in South African sorghum brewery

SCOTLAND’S biggest whisky distiller, Diageo, snapped up a stake in a traditional African brewer yesterday for £23 million.

The drinks giant will form a 50:50 joint venture with Indian businessman Vijay Mallya to run United National Breweries’ traditional sorghum beer business in South Africa.

Diageo agreed to pay £1.3 billion for a 53.4 per cent stake in Mallya’s United Spirits last year.

It had agreed in principle in November to share the South African brewing operation with the tycoon, but yesterday’s announcement put a price on Diageo’s share.

It said the transaction was conditional on, among other things, consent from the South African competition authority.

The deal is expected to complete in the first half of this year.

The much larger sale of United Spirits has also attracted the attention of regulators, which has slowed the transaction.

Chief executive Paul Walsh has said United’s 41 per cent Indian market share would transform Diageo’s footprint on the subcontinent. The Diageo boss, who announced the deal in November, has played down the likelihood of any enforced disposal, including the Whyte & Mackay Scotch business in Scotland, which would help get regulators’ approval.